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Business Rates

Volume 749: debated on Monday 25 November 2013


Asked by

To ask Her Majesty’s Government what steps they will take in response to calls from the Confederation of British Industry, the British Chambers of Commerce and the British Retail Consortium for a reduction in and reform of business rates, particularly in relation to high street retailers.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I give notice that a member of my family works in the retail trade.

My Lords, the Government keep all taxes, including business rates, under review and in doing so take account of all views expressed by representative bodies and the retail industry. While I am not privy to any measures that my right honourable friend the Chancellor of the Exchequer might be considering ahead of the Autumn Statement, noble Lords might wish to be reminded that this Government have taken significant steps to support business, including, for example, doubling small business rate relief.

My noble friend is right to remind the House of what the Government have done so far. Nevertheless, is she not aware that the broader high street, often owned by individuals or families, has faced the most difficult four years certainly in this century and probably since the last war? Is she further aware that the one element that does not seem to change is the business rates, which each year go up and up and are now well above rentals, which is the first time in history that that has happened? Will she therefore look at some short-term action, perhaps freezing the business rate for the year 2014-15, otherwise I fear that shops, particularly in the north and the Midlands, will shut up shop? If action is taken, that will probably mean more investment, more recruitment into the retail trade and will probably be cost-neutral.

I am grateful to my noble friend for raising this important matter. Of course I recognise the difficulties faced by retailers around the country. I regret that I am not able to announce any new tax cuts today—my right honourable friend the Chancellor might have something to say if I did. He has a proven record in supporting business. It is worth reminding noble Lords that by 2015 corporation tax will have fallen eight percentage points to 20%. I also know that he is listening hard and considering all options before deciding what steps to take next towards reducing the deficit and stimulating growth.

My Lords, we know that small businesses are the driving force behind future jobs and growth. As the noble Lord, Lord Naseby, said, we know that many small business owners face a cost of living crisis as high streets struggle, and that many are under the pressures of rising business rates and energy bills. There are some 40,000 empty shops in the UK and more than one in 10 small businesses say they spend the same or more on business rates as on rents. While it is right that the UK has a competitive corporation tax rate, does the Minister not accept that the priority now is to direct more help to small and medium-sized businesses, as Ed Miliband proposed, by cutting the 2015 business rate on 1.5 million properties below the value of £50,000 and freezing it for 2016? This would be paid for by not cutting further in 2015 corporation tax for 80,000 larger companies and multinationals.

I think the Institute of Directors has already disagreed with that approach. We consider that it would be robbing Peter to pay Paul because all businesses benefit from a reduction in corporation tax. It is also worth reminding the noble Lord that this Government have given local authorities powers to grant their own business rate discounts. The local government sector now retains 50% of the business rates that are collected. If local authorities decide to reduce business rates further in their area, since April of this year the Government have been funding 50% of those costs.

Does the Minister agree that while business rates may be one factor in the decline of the high streets, there are a number of others? Does she further agree that this Government have already frozen the revaluation of rates, which was a help? Finally, does she agree that other factors in the high street include rents, the mix of shops, the support of local people and, perhaps most importantly, online shopping, which it is now estimated will account for 30% of all business transacted over the Christmas period?

This Government have done a lot to support local communities in adapting their high streets to the changing behaviour of consumers. My noble friend is right to highlight the increase in online trade. The other point worth making about things we are doing differently is that we changed some of the previous Government’s planning guidance which pushed up parking charges and had quite a negative effect on town centres. We are looking to do more in this area and will consult on that soon.

My Lords, will the Minister confirm that rates in Scotland are devolved to the Scottish Parliament and will be included in a document produced tomorrow, which the Scottish Government mistakenly call a White Paper? Will she take the opportunity—along with all Ministers, including, particularly, the noble and learned Lord, Lord Wallace of Tankerness—to remind the Scottish Government that the title “White Paper” should only be used for proposals which the Government are able to bring in, and that the proposals included in this document can only be brought in with the agreement of the whole of the United Kingdom?

I can only imagine that the noble Lord has chosen to ask a question about process because the substance of my replies have disappointed him. This Government have done an awful lot to support businesses and, for me, today is not the moment to start talking about the way in which different Parliaments operate.

My Lords, I declare an interest in UK Land Estates. Is my noble friend aware that the burden of rates on businesses is three times that of corporation tax? Will she consider approaching the Chancellor to seek to alleviate the burden on some businesses through a one-year rebate for empty premises that would give an incentive to firms to move in, and thereby fill some of the empty shops on our high streets?

We have already introduced some changes on empty premises to support local authorities. New builds which remain empty have a reduction in business rate for up to 18 months; and that is having a positive effect.